POCKETBOOK: Week ending Jan.28, 2017

Markets hate uncertainty

Funny thing about the stock market: On the one hand it looks ahead, on the other it doesn’t like uncertainty. Or, social unrest and there is plenty of that going on.

So, with a new President in town, and one who takes bold actions and is hard to figure, investors would be wise to expect a fair amount of market volatility going forward. Also, that life is going to be more expensive on a number of fronts for individuals and the country.

Re the country, expect more debt.

Even though the GOP is no fan of debt, President Trump has been called the King of Debt. Which is okay when your kingdom is a privately held corporation. But not so okay when you are a public servant.

Market Quick Glance

It was a week of ups and downs and the Dow Jones Industrial Average closing over 20,000. How long the DJIA stays at the level—and continues upward– is anybody’s guess.

Below are the weekly and 1-year performance results for four popular stock indices based on the close of business prices at the close of business on Friday, Jan. 27, according to Bloomberg.

-Indices:

-Dow Jones + 1.78% YTD up from last week’s 0.43%

1yr Rtn +25.32% down from last week’s 26.53%

P/E Ratio 18.55 down from last week’s 18.66

-S&P 500 +2.60% YTD up from last week’s 1.55% YTD

1yr Rtn +20.86% down from last week’s 21.73%

P/E Ratio 21.28 down a tad from last week’s 21.22

-NASDAQ +5.20% YTD up from last week’s 3.23%

1yr Rtn +24.36% up from last week’s 22.65%

P/E Ratio 34.91 up from last week’s 34.39

–Russell 2000 +1.05% way up from last week’s -0.35%

1yr Rtn +34.36% down a bit from last week’s 34.44%

P/E Ratio 48.27 up from last week’s 49.19

-Mutual funds

The average U.S. Diversified Equity Fund ended the week up with a year-to-date return of 2.61% at the close of business on Thursday, Jan. 26, 2017, according to Lipper.

Under that broad U.S. Diversified Equity Fund heading, it was Dedicated Short Bias Funds that lost the most, down on average 5.58%.They were followed by Alternative Equity Market Neutral funds, down 0.08%.

On the plus side, Equity Leverage Funds were up 7.52% nearly double the previous week return of 3.59%. Next in performance were Large-Cap Growth Funds up 4.81% followed by Multi-Cap Growth Funds, up 4.60%.

The average Sector Fund was up 2.73% up from 1.43%; World Equity Fund up 4.47% from 2.55%; and Mixed Asset Funds doubled their average return in a week to close at 2.10% from last Thursday’s close of 1%.

Visit www.allaboutfunds.com for more information about how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Actions have consequences

If there is one thing that President Trump’s slew of executive orders signed during his first full week in office has shown everyone, it is that actions have consequences. They always have. They always will. Unfortunately the consequences part of that equation never really shows its head until after an action has taken place.

Take the executive order signed on Friday to stop travelers from seven countries coming to America. BTW, none of those countries were places that Trump has business relationships.

Clearly that action had political, emotional and economic consequences felt around the globe. I’m not sure if the administration had anticipated any of those consequences but am certain travelers and the general public did not.

Or the order signed to build a wall along the U.S. and Mexican border. One of its many consequences will be its cost.

One of the curious things about executive orders—other than their extraordinary power– is that when you really begin to think about them as actions, the first question a reasoning person has to ask themselves is “Why was it put in place?” and the second, “What purpose will it/they actually serve?”

Word is President Trump has a bunch of executive orders he is prepared to present and sign. As for what the consequences of each of those actions will be, the answer is: We shall see.